Here Are 27 Reality Checks About Retirement

We have never ever had a 10 or 20 year period where a 50/50 portfolio lost money with diversified funds

sure it could , but odds are very low .

the bigger risk is trying to draw 4% or so off a portfolio,inflation adjused to live on ,without investing in equities .

that has failed already to last 64% of the last 129 -30 year rolling periods we had . Anything more than a 10% failure rate is considered to risky

which seems the bigger risk ?

even at 65 we still have money we won’t need to eat with for 20 to 30 years god willing and that is still long term money.

there are all weather portfolios that over the long term.are designed to be bullet proof for those who are very conservative .

fixed income without equities is a guaranteed loss after inflation and taxes.

sure , one can take a draw rate so low they can stuff it in a mattress but to make such inefficient use of the money one scrimped and saved their whole lives makes no sense to me.

there are enough low ulcer portfolios out there that are lower risk that taking the risk of NOT investing is the largest risk
 

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OneEyedDiva said:
When I first started reading investment magazines like Money and Kiplinger, which I subscribed to decades ago, the million dollar figure was used often, either by outright saying that's what people needed or using that figure as an example when giving sample calculations. Then when I started reading various articles online I found the same thing until fairly recently. I always felt that those types of articles could act to discourage, rather than motivate people who felt there is no way they can ever attain that figure. I do remember once that Money did an article on people who managed to have comfortable retirements on a lot less than the 80% of final salary figure, also often recommended. I never personally spoke with an advisor about how much I would need because I'm a self taught investor and manage my own portfolio. I'm also a perfect example of not needing a million.

Just as analysts have stopped pushing the million dollar thing, there are more of them who admit that in certain instances, taking social security early is beneficial. Until about 3 years ago, I only saw that advice once and it was decades ago. Now I feel more realistic advice and figures are mentioned in many financial articles as well as directing people to retirement calculators so they can figure out what's best for themselves.
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There is no such thing as a magic number …we all make what we have work , whether relocating or golden girling it .

it is like asking how long is a rope and anyone who suggests there is a magic number needed knows nothing about retirement planning and is either a writer of click bait or just Financially ignorant
 
IMO a target amount is a mistake.

I think it’s better to save with an eye towards the income it will take to support a certain lifestyle 10, 20, 30 years in the future and save with an eye towards creating that income stream.

Savings and investments are only a part of that income stream for most people.

I’m also content to be a buy and hold investor.

When I die, tomorrow or in thirty years I plan to leave the portfolio that has generated my income behind.

We are all different and it’s interesting for me to understand the different ways that people fund their retirement.
 

Aunt Bea said:
IMO a target amount is a mistake.

I think it’s better to save with an eye towards the income it will take to support a certain lifestyle 10, 20, 30 years in the future and save with an eye towards creating that income stream.

Savings and investments are only a part of that income stream for most people.

I’m also content to be a buy and hold investor.

When I die, tomorrow or in thirty years I plan to leave the portfolio that has generated my income behind.

We are all different and it’s interesting for me to understand the different ways that people fund their retirement.
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Exactly .

once retired it doesn’t matter what our incomes were when a pay check or two were coming in and now are gone .

it doesn’t matter what we THOUGHT we would have based on our predictions of growth .
..
all that matters is what we have to work with when the day comes.

what matters is that we pick an allocation that can safely support the spending level we want to achieve .
 
Well, the way we like to weather the downturns is to move money over into a great "defensive" fund we own. Just sit and wait it out. Of course each time is different and if the market crashes no where in the market is safe.

The irony is the defensive fund has beat the S & P 500 for many years so its like "why not leave it there"...lol.

I know some that think they can time the market...maybe they can. Others like to have skin in the game and be part of the volatility index...lol.
 
Liberty said:
Well, the way we like to weather the downturns is to move money over into a great "defensive" fund we own. Just sit and wait it out. Of course each time is different and if the market crashes no where in the market is safe.

The irony is the defensive fund has beat the S & P 500 for many years so its like "why not leave it there"...lol.

I know some that think they can time the market...maybe they can. Others like to have skin in the game and be part of the volatility index...lol.
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What fund is this that you speak of ?
 
mathjak107 said:
We have never ever had a 10 or 20 year period where a 50/50 portfolio lost money with diversified funds

sure it could , but odds are very low .

the bigger risk is trying to draw 4% or so off a portfolio,inflation adjused to live on ,without investing in equities .

that has failed already to last 64% of the last 129 -30 year rolling periods we had . Anything more than a 10% failure rate is considered to risky

which seems the bigger risk ?

even at 65 we still have money we won’t need to eat with for 20 to 30 years god willing and that is still long term money.

there are all weather portfolios that over the long term.are designed to be bullet proof for those who are very conservative .

fixed income without equities is a guaranteed loss after inflation and taxes.

sure , one can take a draw rate so low they can stuff it in a mattress but to make such inefficient use of the money one scrimped and saved their whole lives makes no sense to me.

there are enough low ulcer portfolios out there that are lower risk that taking the risk of NOT investing is the largest risk
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Of course, some of us don't have the luxury of waiting 20 years. Personally speaking, I've been heavily invested for the vast majority of my adult life. I personally think the current state of the economy is not particularly conducive towards a rising investment environment. I would rather sit on the sidelines for a bit to see how things play out. I'd much rather miss out on a 20% run up than participate in a 20% drop. If investments do take off, it's not going to happen in a single day, I can always get back in at anytime. If it does take a 20% drop, and I am fully in, I will see the full drop.

Of course, inflation acts on one's account value whether one is gaining, staying even or losing.
 
HarryHawk said:
Of course, some of us don't have the luxury of waiting 20 years. Personally speaking, I've been heavily invested for the vast majority of my adult life. I personally think the current state of the economy is not particularly conducive towards a rising investment environment. I would rather sit on the sidelines for a bit to see how things play out. I'd much rather miss out on a 20% run up than participate in a 20% drop. If investments do take off, it's not going to happen in a single day, I can always get back in at anytime. If it does take a 20% drop, and I am fully in, I will see the full drop.

Of course, inflation acts on one's account value whether one is gaining, staying even or losing.
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A good plan first of all usually plans for 25-30 years of money..

so that being the case we tend to have money for eating now , money needed for the intermediate term and money for the long term .

ifone does not have that then they seriously need to look at how they are going to live decades from now .

as time goes on that long term money migrates over to the other buckets as one is 15-30 years out from spending it or needing it .

so in a decent plan there is long term money that needs to be invested as such or one either needs a very low draw or they are talking big risks with only fixed income
 
mathjak107 said:
A good plan first of all usually plans for 25-30 years of money..

so that being the case we tend to have money for eating now , money needed for the intermediate term and money for the long term .

ifone does not have that then they seriously need to look at how they are going to live decades from now .

as time goes on that long term money migrates over to the other buckets as one is 15-30 years out from spending it or needing it .

so in a decent plan there is long term money that needs to be invested as such or one either needs a very low draw or they are talking big risks with only fixed income
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Different strokes for different folks. I agree money needs to be invested for the long term, but I worked too hard to earn the money to just put it someplace and come back 30 years later to see what has become of it. I like to keep at least an occasional eye on my money, and money that has been invested, and will be invested, doesn't necessarily have to be invested at every point along the way.
 
HarryHawk said:
Different strokes for different folks. I agree money needs to be invested for the long term, but I worked too hard to earn the money to just put it someplace and come back 30 years later to see what has become of it. I like to keep at least an occasional eye on my money, and money that has been invested, and will be invested, doesn't necessarily have to be invested at every point along the way.
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Do what feels right for you and your situation, but keep in mind that Investing doesn’t have to be an all or nothing proposition.


"I can't sleep" answered the nervous one.
"Why not?" asked the friend.
"I am carrying so much cotton that I can't sleep thinking about. It is wearing me out. What can I do?"
"Sell down to the sleeping point", answered the friend. - Jesse Livermore
 
Trying to time when to be in or out of markets is a losing game for most people .

University of Michigan Professor H. Nejat Seyhun analyzed 7,802 trading days for the 31 years from 1963 to 1993 and concluded that just 90 days generated 95% of all the years’ market gains — an average of just three days per year. miss those few days and you hurt your return .

It is near impossible to not only reliably miss the worst days but it is just as hard to miss the worst time…

catching the best days is easy as pie ... just be invested . NO PREDICTING NEEDED .
 
mathjak107 said:
Trying to time when to be in or out of markets is a losing game for most people .

University of Michigan Professor H. Nejat Seyhun analyzed 7,802 trading days for the 31 years from 1963 to 1993 and concluded that just 90 days generated 95% of all the years’ market gains — an average of just three days per year. miss those few days and you hurt your return .

It is near impossible to not only reliably miss the worst days but it is just as hard to miss the worst time…

catching the best days is easy as pie ... just be invested . NO PREDICTING NEEDED .
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I feel the same way about stock picking.

I don’t have the skills to reliably predict the next big winner.

I’m content to invest in balanced funds and broad based index funds.

They may not always outperform Wall Street, but they usually outperform Main Street.

“Don’t look for the needle in the haystack. Just buy the haystack!” - John C. Bogle
 
ever see morningstars small investor returns vs the actual fund returns ?

investors shoot themselves in the foot over and over as they lag the funds returns as they try to time when to be in or out .

the more volatile the market the worse the investor returns get compared to the fund itself .

one does not need to sit in the same portfolio forever.

but one does need to stay invested ..

as an example:

i run the fidelity insight income portfolio which is 25% equities for money under 5 years .

i use the fidelity insight growth and income portfolio for money 5-10 years out , that is a balanced portfolio .

i use the fidelity insight unique opportunity portfolio for long term money and that is 100% equities .

how ever half our money is invested in the bullet proof permanent portfolio where it exceeds inflation over time and should never be devastated by any event .

i have been using fidelity insight models since 1987.

if I wasn’t so nervous about things I may have not used Harry browns permanent portfolio and just stayed with the insight models .

but the point is laddering portfolios like one would do fixed income can optimize the money over a specified time frame without bailing to cash thinking your are going to time your way back in


https://www.fmandi.com/about/models.php
 
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mathjak107 said:
There is no such thing as a magic number …we all make what we have work , whether relocating or golden girling it .

it is like asking how long is a rope and anyone who suggests there is a magic number needed knows nothing about retirement planning and is either a writer of click bait or just Financially ignorant
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I absolutely agree, which was my point. And truth be told, there are too many who don't know nor are willing to learn about retirement planning until it's too close to their retirement and they start to panic.
 
Aunt Bea said:
IMO a target amount is a mistake.

I think it’s better to save with an eye towards the income it will take to support a certain lifestyle 10, 20, 30 years in the future and save with an eye towards creating that income stream.

Savings and investments are only a part of that income stream for most people.

I’m also content to be a buy and hold investor.

When I die, tomorrow or in thirty years I plan to leave the portfolio that has generated my income behind.

We are all different and it’s interesting for me to understand the different ways that people fund their retirement.
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"I think it’s better to save with an eye towards the income it will take to support a certain lifestyle 10, 20, 30 years in the future and save with an eye towards creating that income stream." I just read an article the other day that made that very same point Aunt Bea.
 
It is the power of good compounding over longer periods of time that takes the little bits we save and grows it into meaningful amounts …

that remains true even retirement where long term money still need to grow so it can become our short and intermediate term money later on .

the failed retirement graveyard is filled with those who failed to realize that having growth is important to the success rate of their income stream .

129 rolling 30 year cycles have demonstrated that trying to go with fixed income alone has been the riskiest choice with the highest rate of failures
 
mathjak107 said:
Trying to time when to be in or out of markets is a losing game for most people .

University of Michigan Professor H. Nejat Seyhun analyzed 7,802 trading days for the 31 years from 1963 to 1993 and concluded that just 90 days generated 95% of all the years’ market gains — an average of just three days per year. miss those few days and you hurt your return .

It is near impossible to not only reliably miss the worst days but it is just as hard to miss the worst time…

catching the best days is easy as pie ... just be invested . NO PREDICTING NEEDED .
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That is a very interesting statistic, I can't help but wonder why I never see the same analysis done on loses. Even the statistic you quote is based on 30 year old data, nothing more recent? Just my personal perception, but today's market is very different than the market 30 years ago,

I don't necessarily disagree with most of your basic assumptions. I just happen to feel that uncertainty is the name of the game with today's economy. The market tends not to like uncertainty and I choose to take most of my chips off the table until some of that uncertainty settles out. As I've said before if I miss out on a sudden, explosive rise in the market, it's not going to make alot of difference to my lifestyle. The same can't be said for a sudden explosive drop in the market, which I happen to think is at least a possibility.

For me, it's a no brainer, sounds like not so much for others.

The best advice I can share - Don't get your investment advice from random strangers on the internet (especially me).
 
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HarryHawk said:
That is a very interesting statistic, I can't help but wonder why I never see the same analysis done on loses. Even the statistic you quote is based on 30 year old data, nothing more recent? Just my personal perception, but today's market is very different than the market 30 years ago,

I don't necessarily disagree with most of your basic assumptions. I just happen to feel that uncertainty is the name of the game with today's economy. The market tends not to like uncertainty and I choose to take most of my chips off the table until some of that uncertainty settles out. As I've said before if I miss out on a sudden, explosive rise in the market, it's not going to make alot of difference to my lifestyle. The same can't be said for a sudden explosive drop in the market, which I happen to think is at least a possibility.

For me, it's a no brainer, sounds like not so much for others.

The best advice I can share - Don't get your investment advice from random strangers on the internet (especially me).
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He did the same look at losses . If one could avoid The biggest down days they would have an incredible return .

but not only has there been no way of knowing when we will have the worst down days , few are successful at even avoiding the worst broader time frames.

not missing the best is easy
 
HarryHawk said:
I would rather sit on the sidelines for a bit to see how things play out. I'd much rather miss out on a 20% run up than participate in a 20% drop. If investments do take off, it's not going to happen in a single day, I can always get back in at anytime.
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That's the thing, how will you know when to get back in? And actually the big gains do happen quickly (although not in one day). There's stats out there that show if you miss just the best 4-5 days of gains a year it kills your portfolio. You're very likely to miss those gains if you try timing the market. Maybe you can do it, but the vast majority of people will be poorer for it.
 
I have 3 years of expenses in non equities that I can use in a market downturn without selling anything. I'm not smart enough to time the market and statistics show that the vast majority of people aren't either, including the so called experts.
 
Not only is it hard to time but anyone who bailed isn’t throwing back in early on what they pulled out .

rather they dip their toes thinking it is a suckers rally

markets make their biggest moves long before there are signs anything changed .

by the time they get it all back in if they even do , they are way behind…
 

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